TMI Blog2010 (10) TMI 1069X X X X Extracts X X X X X X X X Extracts X X X X ..... of manufacturing and export of textiles, had claimed tailoring and packing expenses of ₹ 50,70,756/-. During the course of assessment proceedings assessee had produced books of accounts, bills and vouchers. However, as per the AO, for expenses like weaving, stitching, mudi coolie, sample, development and packing charges, the booking was in the form of vouchers. As per the AO, some of the vouchers were defective in nature. AO also states in the assessment order that the representative of the assessee had accepted that the expenses were not properly vouched. AO thus made an adhoc disallowance of 2% of the claim, which worked out to ₹ 1,01,415/-. 4. In its appeal before the CIT(A) submission of the assessee was as under: It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see that for coolly charges and packing charges only vouchers could be there, since the recipients were largely illiterate and could not be supposed to have printed bill books or receipts book for issuing bills for services rendered by them. Though the AO has stated that some of the vouchers were defective, he could not point out what way the vouchers were defective. Assessee s claim before the CIT(A) was that vouchers clearly indicated the date, name of the person, amount paid and the nature of coolly payments made and further, it had deducted TDS wherever applicable. We are of the opinion that without pointing out specific defect, an adhoc disallowance was not warranted, especially considering the nature of the assessee s business and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trical fittings connected with windmill should be taken as part of windmill only and they are different from the normal electrical fittings used in the normal sense. H.T. Lines, Power Transformer, Wiring Cable lines, Meter boxes etc., are all included in the windmill generation only without which the generation and transmission of electrical energy will not be possible. Hence, all the expenses connected with the installation of the windmill as per the invoice of the suppliers relate only to windmill, except the cost of land and development charges and depreciation is to be allowed only at 80% if installed before September or at 40% if installed after September. Windmill sans the abovementioned components ceases to be a windmill in commercia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on and electrical fittings which were a part of the windmill. Assessee s claim that these could not be seen as something separate from a windmill, has not been effectively rebutted by the Revenue. In the scenario of the working of a windmill, we can consider such items only as its integral part, if we apply the functional test. No doubt, in the case of Poonwala Finvest And Agro (P) Ltd. (supra), relied on by the DR, it was held that civil works for control room, site development and internal road developments were not eligible for 100% depreciation, available to a windmill. However, in the same decision it was held that transformers upto DP structure had to be considered as integral part of windmill. The pertinent point here is that the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the order. There can be no dispute that a wind mill is an apparatus that harnesses wind power, for a variety of uses like pumping water, driving of saw mill, grinding cone and/or driving electrical turbines. A typical wind mill, as installed by the assessee, which is of Suzlon Corporation, would consist of a specialized foundation, on which the wind blades are attached through a post. The Blades connected in the top is a revolving apparatus to which different numbers of arms are attached. When it is used for producing electricity, these are called wind turbines and serves as a significant source of electrical energy. Being a non-conventional source of energy with renewable inputs and which is nature friendly, world over, windmills have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plant. In our opinion, the expenses relating to the land and foundation specially incurred with a view to serve the technical requirements would also become a part of the plant in a case that of a wind mill. Similarly, in the case of CIT v. Herdilia Chemicals (216 ITR 742), Hon ble jurisdictional High Court held that huge land measuring 360 acres taken on ease for the purpose of erection of plant and machinery where the entire factory was to be constructed in this land and expenses incurred for the foundation meant for fixing the machinery and for the purpose of leveling the land, formed a part of the cost of the plant. If we look at Appendix I to the Income-tax Rules, prescribing the rates of depreciation, it can be seen that Legislature h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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